Guidance for Q1:

Estimated earnings for Q1 2018:
Revenue NOK 7.1 bn (Q1 2017: NOK 5.4 bn)
EBITDA* NOK -2.0 bn (Q1 2017: NOK -1.3 bn)
EBIT* NOK -2.3 bn (Q1 2017: NOK -1.7 bn)
EBT* NOK -2.6 bn (Q1 2017: NOK -1.8 bn)

*Including other losses/gains related to hedging and currency

Update summary
- Strong presales
- Currency and fuel price effects challenging in Q1 2018
- Full-year unit cost guidance excl fuel and depreciation unchanged
- Full-year unit cost guidance incl fuel and depreciation increased by NOK 0.01 due to higher than expected fuel price
- Aircraft sales with positive equity impact
- Initiating strategic review of Norwegian Reward
- LOI signed for financing six 787-9 aircraft delivering in 2018 and 2019; no additional funding need for working capital or PDPs
http://www.newsweb.no/newsweb/search.do ... eId=447063


Reference is made to the stock exchange announcement published by Norwegian Air Shuttle ASA (the "Company") earlier today. The Company has engaged Arctic Securities AS, Carnegie AS, Danske Bank, Norwegian Branch and Pareto Securities AS as Joint Lead Managers (together the "Managers") to advise on and effect a contemplated private placement of shares with gross proceeds of up to NOK 1,300 million by issuing new ordinary shares in the Company (the "Private Placement"), each with a nominal value of NOK 0.10 (the "New Shares"). The Private Placement consists of two separate tranches; one tranche with up to 2,950,963 New Shares in the Company ("Tranche 1") and a second tranche with up to the number of New Shares that corresponds to a total transaction size (both tranches) of up to NOK 1,300 million ("Tranche 2"). The net proceeds from the Private Placement will strengthen the Company's balance sheet and ensures substantial buffer to the bond covenant of NOK 1,500 million in equity requirement, and will otherwise be used for general corporate purposes.
http://www.newsweb.no/newsweb/search.do ... eId=447065

They are in trouble for sure....

SAS A340 wrote:

They are in trouble for sure....

Overall the big issues are they have expanded too fast and bought too many new planes? That's the gist of it correct?

Who in the world would invest in them right now!

Didn't they only have 4 billion NOK or so in cash in their full year results? (ignoring the Leeham article saying it might be dodgy accounting). They are getting dangerously close to liquidation. Given their needs they might end up having to sell and lease back with horrible terms due to desperation and still have that debt. I could see that raising their CASK enough to not even be able to break even in the summer this year.

At this point I'm going to be surprised if they see 2019.

At some point, does Norwegian air’s board have the power to sack this ceo of theirs and pursue a more moderate approach?

LupineChemist wrote:

Who in the world would invest in them right now!

Didn't they only have 4 billion NOK or so in cash in their full year results? (ignoring the Leeham article saying it might be dodgy accounting). They are getting dangerously close to liquidation. Given their needs they might end up having to sell and lease back with horrible terms due to desperation and still have that debt. I could see that raising their CASK enough to not even be able to break even in the summer this year.

At this point I'm going to be surprised if they see 2019.

They also released info today that they managed to secure 1,3 billion NOK in new Money from the owners. But like this they will burn that Money fast.

Well... O'Leary did predict Monarch and Norwegian would go to the wall over the winter.

He got one right... his timing might be slightly off on the other.

kanye wrote:

LupineChemist wrote:

Who in the world would invest in them right now!

Didn't they only have 4 billion NOK or so in cash in their full year results? (ignoring the Leeham article saying it might be dodgy accounting). They are getting dangerously close to liquidation. Given their needs they might end up having to sell and lease back with horrible terms due to desperation and still have that debt. I could see that raising their CASK enough to not even be able to break even in the summer this year.

At this point I'm going to be surprised if they see 2019.

They also released info today that they managed to secure 1,3 billion NOK in new Money from the owners. But like this they will burn that Money fast.

They didn't secured that equity yet, private placement is still ongoing. Result (including stock price) of private placement is expected at tomorrow morning.

DY is such a sad saga.
At this point, they should just shut down the longhaul ops, sell the 787's while they are still in great demand, and refocus on their core profitable short-haul ops...

Kevinflyer wrote:

SAS A340 wrote:

They are in trouble for sure....

Overall the big issues are they have expanded too fast and bought too many new planes? That's the gist of it correct?

Basically. I actually think the Norwegian saga proves low cost long haul IS viable, just that they executed it very poorly. The main issue is they tried to a Ryanair model with huge amounts of scale and you just can't do the same thing as in Europe where you make a place a destination with demand by offering 20€ fares. There aren't that many people that weren't going to spend 450€ on a TATL ticket but now will because the ticket is 300€. It's still a fair amount of money for a normal family and you can't reasonably do it in a weekend. There just isn't as much space to differentiate.

That said, you can pick up a big part of the leisure market that does exist by offering low fares (as Nowegian does and gets a fair amount of traffic that way). But by continually expanding they are oversupplying the markets and trashing their own yields so a massive amount of dead leads to higher costs while the supply suppresses the yield.

FR has said they haven't gone for TATL because the capex for the aircraft is too much but I bet that if Norwegian goes down, there will be a glut of Dreamliners on the market so I could see them picking up 5-10 for cheap and starting there.

Can someone translate this for the financially inept?

Last month many people think that I'm crazy, when I opened this topic:

Norwegian released worst forever monthly RASK 0,26 NOK


Norwegian released today their traffic figures of January and those shows their RASK is still going downhill. Their growth doesn't seem sustainable, and I think they need brakes right now. I think they made almost 1000 million deficit in January and there is coming many unprofitable months.

viewtopic.php?f=3&t=1385819

JBLUA320 wrote:

Can someone translate this for the financially inept?

EBITDA is just straight operational profit/loss
EBIT is the profit/loss taking into account depreciation of their assets (a big deal with a fleet like theirs) as well as some other stuff
EBT is the final accounting profit/loss (before taxes, as EBT means Earnings Before Taxes) and also includes interest on debt.

In even more layman's terms...they're burning through what money they have left and are in very, very poor shape.

JBLUA320 wrote:

Can someone translate this for the financially inept?

Same here. Can someone put what is going on in layman's terms. I am not smart enough to figure out what all that stuff in the original post means.

Estimated margins for Q1 2018:

EBITDA -28,2%
EBIT -32,4%
EBT -36,6%

armchairceonr1 wrote:

Estimated margins for Q1 2018:

EBITDA -28,2%
EBIT -32,4%
EBT -36,6%

That is terrible. Hopefully they have enough cash to ride this or this ship to will stop moving fast!

I wonder what the sentiment is within DY? Is there concern?

My impression is that they act as though everything is on track and that it's just a matter of reaching critical mass.

It’s fast starting to look like who is going to be in the best position to make the most of their impending collapse, that said I’m guessing the vast majority of the desirable assets will be on finiance anyway so will depend very much on the financiers as to if areas get broken up, wound up and returned or sold as a going concern

I don’t see the LH Group being that interested right now given they are busy with the intergration of what is left of AB and project EuroWings
AF/KL I could certainly see some interest in parts of the group
IAG - I could see a fair amount of interest seeing it as a way to kill off a LH threat out of LGW or maybe even an opertunity to really make Level are player in the market both across the continent and even maybe at LGW

Ryanair, I could see them also being interested some additional and earlier MAX and additional 800s, a lot of pilots and crew, although many are probably ex-FR and again killing off completion, plus finanally the chance of making it TATL, also the UK devision could be the perfect protection to any post BREXIT issues

U2? I don’t see them playing a part in this except maybe getting some of the LGW slot portfolio

LHUSA wrote:

I wonder what the sentiment is within DY? Is there concern?

My impression is that they act as though everything is on track, it's just a matter of reaching critical mass.

Like any company they will act as though all is well right up until it isn’t (within regulatory framework), then there will be a rapid downfall in the company, often from something that to a well off company would not even register as a blip on their radar, but when cashflow is strained even the slightest hiccup can kill a company

mwhcvt wrote:

I don’t see the LH Group being that interested right now given they are busy with the intergration of what is left of AB and project EuroWings

LH could buy some 787s to replace the OS longhaul fleet for cheap!

LOWS wrote:

mwhcvt wrote:

I don’t see the LH Group being that interested right now given they are busy with the intergration of what is left of AB and project EuroWings

LH could buy some 787s to replace the OS longhaul fleet for cheap!

True but only if the lessors really need to liqudate some of the fleet, and I’m not sure the lessors will be that willing to discount on what are still fairly desirable assets

LOWS wrote:

mwhcvt wrote:

I don’t see the LH Group being that interested right now given they are busy with the intergration of what is left of AB and project EuroWings

LH could buy some 787s to replace the OS longhaul fleet for cheap!

UA/AA/AS would be lining up to buy the entire fleet!

If Norwegian goes under, the US airlines will be scrambling to buy the assets.

LupineChemist wrote:

Basically. I actually think the Norwegian saga proves low cost long haul IS viable, just that they executed it very poorly.

How so? They proved they can fill a long haul aircraft with low fares, but how have they proved they can substantially lower the unit cost to be covered by the lower unit revenue?

LupineChemist wrote:

JBLUA320 wrote:

Can someone translate this for the financially inept?

EBITDA is just straight operational profit/loss
EBIT is the profit/loss taking into account depreciation of their assets (a big deal with a fleet like theirs) as well as some other stuff
EBT is the final accounting profit/loss (before taxes, as EBT means Earnings Before Taxes) and also includes interest on debt.

In even more layman's terms...they're burning through what money they have left and are in very, very poor shape.

A little more detail...EBITDA, or earnings before interest, taxes, and depreciation/amortization generally is a measure of cash operating profit/loss, and may or may not be adjusted for other non-cash items such as impairments, non-cash gains/losses, currency fluctuations and hedging gains/losses. For large companies, it's a common measure of operating cash flow profit/loss and negative isn't good. But it's important to understand what kinds of adjustments have and haven't been made.

RIP Norwegian, a basket case airline if ever there was one , it wont be any loss to the industry and when the final nail is hammered into the coffin all the other airlines trying to compete with Norwegian can stop this rapid race to the bottom with quality and service returning to the major players.

andymartin wrote:

RIP Norwegian, a basket case airline if ever there was one , it wont be any loss to the industry and when the final nail is hammered into the coffin all the other airlines trying to compete with Norwegian can stop this rapid race to the bottom with quality and service returning to the major players.

I thought the service on Norweigan was excellent and it's fares are amazing. They are currently offering transatlantic fares of £140. I'd much rather fly Norweigan than most other airlines on the same routes. Maybe they expanded too fast for their own good, but I have no complaints at all about what they are offering. If they are going to go down, I'd say that anyone that has the chance should take advantage of the low fares and good service whilst they still can.

[*]

LHUSA wrote:

I wonder what the sentiment is within DY? Is there concern?

My impression is that they act as though everything is on track and that it's just a matter of reaching critical mass.

They all took those jobs trying to put the established carriers out of business. Now many will be looking for jobs with those same carriers.

Since they don’t have employees, as everyone works for staffing companies doing business with NOrwegian they are all just nomad employees.

There is not a lot of sympathy in this industry for anyone tied to the NOrwegain brand. They may find it difficult getting jobs elsewhere.

peterinlisbon wrote:

it's fares are amazing. They are currently offering transatlantic fares of £140.

No small wonder they're nosediving into oblivion.

peterinlisbon wrote:

andymartin wrote:

RIP Norwegian, a basket case airline if ever there was one , it wont be any loss to the industry and when the final nail is hammered into the coffin all the other airlines trying to compete with Norwegian can stop this rapid race to the bottom with quality and service returning to the major players.

I thought the service on Norweigan was excellent and it's fares are amazing. They are currently offering transatlantic fares of £140. I'd much rather fly Norweigan than most other airlines on the same routes. Maybe they expanded too fast for their own good, but I have no complaints at all about what they are offering. If they are going to go down, I'd say that anyone that has the chance should take advantage of the low fares and good service whilst they still can.

If they have to sell tickets this cheap to be able filling up their planes i can see the problem, and adding more planes is not going to make it more easy.

I'm not a big fan of their LH product but I do hope they'll get back on tracks. They are a big and efficient player in HEL with both domestic and European services, bringing much needed competition to the market.

Further up in the thread someone mentioned critical mass.....well, if they lose money on every ticket they sell, there is no critical mass. They will only meet their demise quicker the more they sell.

At this point they have to lower cost and attain some pricing power. Pricing power seems almost unattainable given the number of planes they have on order.

Regards,

Europe and TATL has too much capacity.

When you look at the cost to operate a jet airliner, fares SHOULDN'T be $100-$200. It doesn't make and ounce of sense.

mcdu wrote:

[*]

LHUSA wrote:

I wonder what the sentiment is within DY? Is there concern?

My impression is that they act as though everything is on track and that it's just a matter of reaching critical mass.

They all took those jobs trying to put the established carriers out of business. Now many will be looking for jobs with those same carriers.

Since they don’t have employees, as everyone works for staffing companies doing business with NOrwegian they are all just nomad employees.

There is not a lot of sympathy in this industry for anyone tied to the NOrwegain brand. They may find it difficult getting jobs elsewhere.

Oh, it's the unionist saying the usual.

US jobs are at risk!

US safety is at risk!

US jobs are at risk!

US safety is at risk!

LupineChemist wrote:

Basically. I actually think the Norwegian saga proves low cost long haul IS viable, just that they executed it very poorly.

They "proved" that there's a market, by losing their shirts trying to reach it?
In what way does that make sense.

The question has never been if there's a market for low cost longhaul travel. Of course there is.
The operative challenge has been: can you make money while doing it?

For Norwegian, and just about anyone else who's tried over the Atlantic, the answer's been: No.

Hell, you could fill a nonstop between Albuquerque and Bratislava if you charged $0.99 for each seat.
But what good does that do anyone on the operations side?

NW747-400 wrote:

peterinlisbon wrote:

it's fares are amazing. They are currently offering transatlantic fares of £140.

No small wonder they're nosediving into oblivion.

Yes, well I don't know how they can make money at these prices but as a passenger I'm interested in buying tickets, not shares in the company. I suppose it could just be a marketing strategy. These prices are only available on certain flights bought in advance, obviously, but in any case they are connecting the USA and Europe for an incredibly low price.

Pe@rson wrote:

mcdu wrote:

[*]

LHUSA wrote:

I wonder what the sentiment is within DY? Is there concern?

My impression is that they act as though everything is on track and that it's just a matter of reaching critical mass.

They all took those jobs trying to put the established carriers out of business. Now many will be looking for jobs with those same carriers.

Since they don’t have employees, as everyone works for staffing companies doing business with NOrwegian they are all just nomad employees.

There is not a lot of sympathy in this industry for anyone tied to the NOrwegain brand. They may find it difficult getting jobs elsewhere.

Oh, it's the unionist saying the usual.

US jobs are at risk!

US safety is at risk!

US jobs are at risk!

US safety is at risk!

I think the contractor jobs are at risk.

LAX772LR wrote:

LupineChemist wrote:

Basically. I actually think the Norwegian saga proves low cost long haul IS viable, just that they executed it very poorly.

They "proved" that there's a market, by losing their shirts trying to reach it?
In what way does that make sense.

The question has never been if there's a market for low cost longhaul travel. Of course there is.
The operative challenge has been: can you make money while doing it?

For Norwegian, and just about anyone else who's tried over the Atlantic, the answer's been: No.

Hell, you could fill a nonstop between Albuquerque and Bratislava if you charged $0.99 for each seat.
But what good does that do anyone on the operations side?

Plus, the legacies are emulating their model with higher density seating, smaller premium cabins, a la carte fares and even low-cost subsidiaries. Consumers want lowest possible fares and will buy up where they see fit.

LAX772LR wrote:

LupineChemist wrote:

Basically. I actually think the Norwegian saga proves low cost long haul IS viable, just that they executed it very poorly.

They "proved" that there's a market, by losing their shirts trying to reach it?
In what way does that make sense.

The question has never been if there's a market for low cost longhaul travel. Of course there is.
The operative challenge has been: can you make money while doing it?

For Norwegian, and just about anyone else who's tried over the Atlantic, the answer's been: No.

Hell, you could fill a nonstop between Albuquerque and Bratislava if you charged $0.99 for each seat.
But what good does that do anyone on the operations side?

I mean, there are solid numbers here for around what the RASK can be so all you need to know is that if you can get aircraft cheap enough to keep your CASK down to the right amount, you're good. I just don't know how much more 20% margin expansion opportunity is out there for FR so they may end up chasing some lower margin growth and I think they could do it low enough cost and are smart enough to not cannibalize their own yields.

peterinlisbon wrote:

NW747-400 wrote:

peterinlisbon wrote:

it's fares are amazing. They are currently offering transatlantic fares of £140.

No small wonder they're nosediving into oblivion.

Yes, well I don't know how they can make money at these prices but as a passenger I'm interested in buying tickets, not shares in the company. I suppose it could just be a marketing strategy. These prices are only available on certain flights bought in advance, obviously, but in any case they are connecting the USA and Europe for an incredibly low price.

I suppose you're also interested in having your airline exist when it comes time to use those tickets.

mcdu wrote:

[*]

LHUSA wrote:

I wonder what the sentiment is within DY? Is there concern?

My impression is that they act as though everything is on track and that it's just a matter of reaching critical mass.

They all took those jobs trying to put the established carriers out of business. Now many will be looking for jobs with those same carriers.

Since they don’t have employees, as everyone works for staffing companies doing business with NOrwegian they are all just nomad employees.

There is not a lot of sympathy in this industry for anyone tied to the NOrwegain brand. They may find it difficult getting jobs elsewhere.

Strongly disagree, at least for line employees. Competition is competition and there is too much of a pilot shortage for any airline to care that a qualified aviator came from Norwegian. S/he didn't take the job with DY to put someone else out, they took the job because it's what was available and best for them. There is also far more demand globally for flight attendants than there are qualified candidates to fill them. Nobody from the line will have a hard time.

It may be a different case for corporate, though.

It makes sense that they might be losing money, but from a customer point of view. I've found their service to be some of the best. The cost of their premium seats on the 787 is perfect for leisure travelers who want something nicer than economy on a long haul and can't afford business or qualify for an upgrade.

I've flown them Inter-Europe and also JFK-FDF and found clean planes, friendly crew.

I think they've grown too fast, and probably there are a number of people turned off by their initial entry into the U.S. market. I recall some pretty hefty delays and substitutions with Charter carriers early on.

Varsity1 wrote:

LOWS wrote:

mwhcvt wrote:

I don’t see the LH Group being that interested right now given they are busy with the intergration of what is left of AB and project EuroWings

LH could buy some 787s to replace the OS longhaul fleet for cheap!

UA/AA/AS would be lining up to buy the entire fleet!

If Norwegian goes under, the US airlines will be scrambling to buy the assets.

I don't see why. EU rules limit non-EU ownership to 49%. U.S. carriers can't operate the assets in the EU at whim. Lessors still own the planes, even after DY is gone. Might some U.S. carriers want to talk to lessors about scooping up assets that are too numerous for lessors to place short-term? AA and UA would. DL could probably train pilots fast enough and has lots of experience inducting aircraft in a hurry but would want a great deal. AS with a dozen 787s on day 1? Hah hah hah.

MIflyer12 wrote:

Varsity1 wrote:

LOWS wrote:

LH could buy some 787s to replace the OS longhaul fleet for cheap!

UA/AA/AS would be lining up to buy the entire fleet!

If Norwegian goes under, the US airlines will be scrambling to buy the assets.

I don't see why. EU rules limit non-EU ownership to 49%. U.S. carriers can't operate the assets in the EU at whim. Lessors still own the planes, even after DY is gone. Might some U.S. carriers want to talk to lessors about scooping up assets that are too numerous for lessors to place short-term? AA and UA would. DL could probably train pilots fast enough and has lots of experience inducting aircraft in a hurry but would want a great deal. AS with a dozen 787s on day 1? Hah hah hah.

NOrwegian has no assets. Everything is leveraged. When it finally implodes the creditors will take whatever they can. The aircraft will go on the used market.

LupineChemist wrote:

I mean, there are solid numbers here for around what the RASK can be so all you need to know is that if you can get aircraft cheap enough to keep your CASK down to the right amount, you're good.

Unfortunately it ain't that simple; the fact that no one's done/sustained it, should be the first clue.

Also, CASK is a function of configuration more so than aircraft itself.
DY and BA both fly new 789s, but DY's CASK is going to be a hell of a lot lower than BA's, considering the 128 seat disparity.

But then again, I'd bet a paid 77W at nearly 500 seats (a la AC) would blow them both away, in terms of per seat cost.

Perhaps its a good thing all of my booked European flights for this summer aren't with Norwegian. Big switch from 2015 when I flew them on two roundtrips and two one-ways. Service and fares were good, but this time around fares were more expensive than SAS except for one but the timing wasn't convenient.

This is what happens when your business plan is to lose a little on every seat, but make it up on volume.

Subscription price in private placement was 155 NOK, while closing price yesterday was 171,60 NOK. They got 1300 million NOK now, but it's only temporary relief. http://www.newsweb.no/newsweb/search.do ... eId=447091

armchairceonr1 wrote:

They got 1300 million NOK now, but it's only temporary relief.

Bottom of the PR linked to by OP: "The liquidity is satisfactory and net cash is increasing driven by the strong presales. Hence, Norwegian sees no need for additional funding of working capital or PDPs."

However, combining a few paragraphs above, it seems they have yet to finance approx $750 million in aircraft acquisition costs for 2018... They're reviewing "strategic options" for their frequent flier program, but they'll probably be looking for more financing soon.

blueflyer wrote:

armchairceonr1 wrote:

They got 1300 million NOK now, but it's only temporary relief.

Bottom of the PR linked to by OP: "The liquidity is satisfactory and net cash is increasing driven by the strong presales. Hence, Norwegian sees no need for additional funding of working capital or PDPs."

However, combining a few paragraphs above, it seems they have yet to finance approx $750 million in aircraft acquisition costs for 2018... They're reviewing "strategic options" for their frequent flier program, but they'll probably be looking for more financing soon.

Equity is bigger problem than cash right now because they have covenants on their bonds. 1300 million NOK is only half of their Q1 losses and they could need new equity again very soon to keep it over 1500 million NOK.

If they had to sell up . Could be an interesting purchase for Ryanair or easyjet to enter long haul . If you could separate out the good stuff.